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Step into the online groups known as subreddits and it is easy to see how many young investors are finding a place to belong.

Whether it’s sage advice about paying down debt and diversification or a dazzling assault of stock tickers, exclamation points and memes, the array of available subreddits guarantees an investor will find one that speaks their language.

Online platforms such as Reddit, Twitter and Discord have swelled in recent years as watering holes for personal finance, cryptocurrency and investment communities, driven by growing trading accessibility, pandemic savings and, within some groups, an irreverent underdog attitude imbued with self-effacing irony.

Considered the Wild West by some, one thing is clear: These groups have influence over young investors’ financial decisions. Today, more than half of the 18-to-34 age group get stock-trading tips from social-media sites such as Reddit, compared with just 4 per cent of investors aged 55 to 64, according to research by financial services company Hargreaves Lansdown PLC. Reddit forum r/wallstreetbets, is now followed by more than 10 million users.

Financial information shared over the internet should, of course, always be treated with caution. And let’s face it, some of these platforms have become easy targets for ridicule. But insiders say behind that derision lies a misunderstanding of a new type of internet culture, where young people form communities and identity alongside their financial decisions.

This culture gained speed as the pandemic highlighted the divide between the wealthy and the average investor, said Dave Lauer, an Ottawa-based financial executive whose frequent Twitter analysis of economics and meme stocks have attracted more than 100,000 followers.

“A lot of people have experienced hardship over the last few years, and they’ve seen a lot of wealthy people not experience that hardship,” Mr. Lauer said. “It’s often lost on people how this coincided with COVID, and how in a time of great stress people sought community and support, and they found it here.”

Last year, in what has since been described as a protest against institutional short sellers, Reddit groups such as r/wallstreetbets gained notoriety for sparking the price surge of unlikely companies such as electronics retailer GameStop Corp., movie chain AMC Entertainment Holdings Inc., and BlackBerry Ltd. Early buyers claimed they saw true value in these hallmarks of a bygone era. Later investors piled on to ride the upward wave.

Up popped a Canadian version, r/baystreetbets, with 42,800 members conversing under the image of a beaver with slicked-back hair and sunglasses. The group’s satirical slogan is a quote from TV character Michael Scott in The Office: “You will get rich quick. We all will!”

Simultaneously, the growth of cryptocurrency technology led to a spike in discussion groups, with topics ranging from specific crypto price movements to regulatory news. Posts and comments discussing crypto quickly outpaced those mentioning investing, which too have risen since the beginning of the pandemic.

Since then, Reddit groups have become home to personalized charts from individual investors celebrating gains and losses on investments, some swinging by hundreds of thousands of dollars in both directions. In March, one investor shared what they claimed to be the result of their investments in a post to r/wallstreetbets: a chart showing investment in GameStop worth US$1.3-million, up from an initial buy of $300,000. Just a few weeks prior, another investor had posted to the same forum with the sullen admission: “200k to 9k. I lost all the money my grandma gave me before she died.”

Mr. Lauer agreed that some investors are taking bigger risks than they ought to, but pointed out the groups are valuable for playing host to crowdsourced research that otherwise would not be possible.

“They’re thirsty for knowledge,” Mr. Lauer said. “I really like seeing what the hive mind discovers. I think they’ve found all sorts of things that wouldn’t have been found otherwise.”

But others say this culture, which promotes trading and speculative investments, is the sort of behaviour young Canadians should be wary of. “It’s great to get your motivation and inspiration from social media, but my God, don’t just buy whatever stocks people are talking about,” said millennial finance blogger Jessica Moorhouse, who has gained a following from her index fund investment strategies.

Moreover, these groups are not inviting for everyone. Ms. Moorhouse said many feel like an “old boys’ club,” with online posts frequently using derogatory language, sexist or homophobic slurs. Moreover, the chat functionality of these groups makes for an environment that, for an outsider not familiar with in-group terminology, is overwhelming.

But other online communities have developed a completely different type of culture, which other personal finance influencers say actually provides valuable advice.

Some groups, such as r/PersonalFinanceCanada, followed by more than 800,000 Reddit users, actually ban specific investment recommendations, instead encouraging users to consider a broader investing strategy as part of a number of tools toward financial well-being.

On r/CanadianInvestor, three out of the 10 most popular posts from the past year are related to real estate, exchange-traded funds and guaranteed investment certificates. “Where to safely park 100k and let it grow?,” one user queried in typical fashion in early April. “I’m looking for a not too risky and moderately liquid place to set it and forget it until I need a down payment.”

Yet despite the differing approach to investing, these more conservative communities have developed a culture that is just as strong: one that derides speculation and instead, as some members joke, requires the eating of lentils and going without a car.

Regardless of the approach to investing – whether speculative or conservative – social-media users should be aware that advice given online might not fit their situation. As users are seeking out groups that meet their interests, these communities often slant toward the more financially savvy – and those with more money.

Surveys filled out by thousands of users on the subreddit r/FIRE or “Financial Independence, Retire Early” – a lifestyle that encourages frugality and extreme savings – showed that the majority were within the 90th percentile of wealth in their country, and had a net worth of more than $100,000.

Because online groups attract those who agree with that investing approach, users will often encounter only one philosophy, which may not meet their situation. Understandably, financial advisers are wary of these platforms, where users are mostly anonymous and their motives unknown.

“I think that, like any source of information on the Internet, what we’ve all learned is you might not be getting the right information or the full picture,” said Mark Slater, senior wealth adviser at CIBC Wood Gundy. “So my advice would be, beware and do your research on that information, and possibly confirm it with someone that is knowledgeable of this stuff.”

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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